Merchandise exports are unlikely to recover in the current fiscal because of the conflicts in West Asia and Ukraine and the recessionary conditions in the West, analysts said.

They are estimating a marginal fall in exports in the last fiscal at $445 billion from $451 billion a year ago, with the official data expected on April 15.

Analysts do not see significant green shoots in global trade and expect the gloomy outlook to continue this fiscal.

Biswajit Dhar, a distinguished professor, the Council for Social Development said,
“The merchandise exports were unlikely to rebound in the current fiscal as the geo-political situation has not improved significantly.

“Also, the recessionary conditions are prevailing in Europe and the US could adopt more protectionist measures to counter China, which would impact India too.

"If the Republicans return to the White House, the America First policy could have an impact," Dhar said.

“We should aim at $500 billion of merchandise exports as global trade should improve, as the worst is expected to be over and inflation and interest rates start softening. Better exports from PLI-related sectors and market access to FTA will help us to scale exports further in the current fiscal,” Ajay Sahai, director-general and chief executive officer of the Federation of Indian Export Organisations (FIEO), said.

Analysts expect 2024-25 to be a challenging year as there has been no let-up in the geopolitical frictions such as the crisis in the Red Sea and the Ukraine war.

The Red Sea crisis, which has seen direct attacks on merchant shipping, is in its sixth month, while the Ukraine war has completed two years.

The Red Sea crisis has impacted freight rates and the duration of voyages.

The freight cost of commodities trade is much higher and margins are not enough to absorb any big fluctuations, which may see trade shifting to geographies other than Asia, Northwest Africa and Europe.

According to initial estimates of the trade data, merchandise exports will be around $445 billion in the financial year 2023-24, about 1.3 per cent lower than the previous year’s level of $451 billion.

“We expect the merchandise exports in 2023-24 should touch $440 billion which is quite a good achievement looking into the geo-political situation and high inflation affecting demand and certain restrictions on exports of agro commodities,” Sahai said.

Exports grew 3.5 per cent from April to February.